COUNTY OF SONOMA HUMAN SERVICES DEPARTMENT CHILD DEVELOPMENT PROGRAM NO. 49-K AUDIT REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2007

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1 CHILD DEVELOPMENT PROGRAM NO. 49-K AUDIT REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2007 California Department of Education Contract No. CAPP-6080

2 CHILD DEVELOPMENT PROGRAM Audit Report For The Fiscal Year Ending June 30, 2007 T A B L E O F C O N T E N T S Auditor-Controller s Report Page Basic Financial Statements: Balance Sheet... 1 Statement of Revenue and Expenditures... 2 Statement of Changes in Fund Balance... 3 Notes to the Basic Financial Statements Supplementary Information: General Information... 9 Schedule of Expenditures by State Categories CDE Contract Summary Audited Final Fiscal Report for Alternative Payment or Family Child Care Home Programs - CAPP Schedule of Findings and Questioned Costs County of Sonoma Single Audit Schedule of Federally-Funded Expenditures Combining Schedule of Administrative Costs Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Reports Performed in Accordance with Government Auditing Standards

3 RODNEY A. DOLE AUDITOR-CONTROLLER TREASURER -TAX COLLECTOR Auditor-Controller Treasurer-Tax Collector County of Sonoma 585 FISCAL DRIVE SUITE 101F SANTA ROSA, CALIFORNIA (707) FAX (707) DONNA M. DUNK ASSISTANT AUDITOR-CONTROLLER ROBERT BOITANO ASSISTANT TREASURER PAM JOHNSTON ASSISTANT TAX COLLECTOR / AUDITOR Jo Weber, Director County of Sonoma Human Services Department 3600 Westwind Blvd Santa Rosa, California Auditor-Controller s Report We have audited the accompanying basic financial statements of the County of Sonoma Human Services Department Child Development Program No. 49-K , California Department of Education Contract No. CAPP-6080 as of and for the year ended June 30, 2007, as listed in the table of contents. These basic financial statements are the responsibility of the Human Services Department's management. Our responsibility is to express an opinion on the basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the County of Sonoma Human Services Department Child Development Program as of and for the year then ended June 30, 2007, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated December 14, 2007, on our consideration of County of Sonoma Human Services Department Child Development Program s internal control over financial reporting and on our tests of its compliance

4 with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted primarily for the purpose of expressing an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for the purposes of additional analysis, as required by the U.S. Office of Management and Budget Circular A-133, Audits of State and Local Governments, and Non-Profit Organizations, and the Audit Guide for Audits of Child Development and Nutrition Programs issued by the California Department of Education. It is not a required part of the basic financial statements of the County of Sonoma Human Services Department Child Development Program. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements of the County of Sonoma Human Services Department Child Development Program, and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole. December 14, 2007

5 CHILD DEVELOPMENT PROGRAM NO. 49-K CONTRACT NO. CAPP-6080 Balance Sheet June 30, 2007 Alternative Payment Assets Grants receivable $ 22,113 Total assets 22,113 Liabilities and Fund Balance Liabilities: Accounts payable 9,683 Due to County of Sonoma - General Fund 12,430 Total liabilities 22,113 Fund balance: 0 Total liabilities and fund balance $ 22,113 The notes to the basic financial statements are an integral part of this statemen - 1 -

6 CHILD DEVELOPMENT PROGRAM NO. 49-K CONTRACT NO. CAPP-6080 Statement of Revenues and Expenditures for the Fiscal Year Ended June 30, 2007 Alternative Payment Revenues Government appropriation $ 374,710 Maintenance of effort 7,662 Total revenues 382,372 Expenditures Salaries 21,549 Employee benefits 11,567 Provider payments 329,169 Other operating expenses 20,087 Total expenditures 382,372 $ Excess of revenues over/(under) expenditures 0 The notes to the basic financial statements are an integral part of this statement

7 CHILD DEVELOPMENT PROGRAM NO. 49-K CONTRACT NO. CAPP-6080 Statement of Changes in Fund Balance for the Fiscal Year Ended June 30, 2007 Alternative Payment Fund balance - July 1, 2006 $ 0 Excess of revenues over expenditures and other uses 0 Fund balance - June 30, 2007 $ 0 The notes to the basic financial statements are an integral part of this statement - 3 -

8 CHILD DEVELOPMENT PROGRAM Notes To the Basic Financial Statements June 30, 2007 I. General Information A. Description of Reporting Entity The County of Sonoma Child Development Program (the Program) is funded by the California Department of Education - Child Development Division, except for maintenance of effort which is provided by County of Sonoma s general fund. A portion of the funds from the California Department of Education is passed through from a federal block grant from the United States Department of Health and Human Services. The Program is administered by the Family, Youth and Children s Services Unit of the County of Sonoma Human Services Department. The Program provides child care services for children at risk of neglect, abuse, or exploitation. Child care agreements are authorized in conjunction with a family maintenance plan to provide parents with the opportunity to seek the necessary treatment or parenting classes which help to alleviate the parenting problems which put the children at risk of abuse or neglect. The Program does not have expenditures for travel, books, rent, supplies, or equipment. The gross expenditures reported on the Audited Financial Fiscal Report reflect payments for contracted child care services, administrative costs, and audit expenses incurred by the Family, Youth and Children Services Division to administer the Program. The services acquired are necessary and are generally obtained at a reasonable cost. Rates are periodically adopted and used to control the payments made for services provided. Each contract for child care services specifies the maximum number of hours of child care, rate of pay (based on hours and days of the week to be obligated), the name(s) of the child or children and termination date. Unless the day care provider is a close relative, the day care provider must be licensed by the County of Sonoma or State of California. This process is used to select the most qualified services available so as to enable the parent to obtain work without the worry of caring for their child or children. Child care providers under contract submit a monthly claim for services rendered. The claim identifies the name of the person providing the child care, the children receiving the care, the month, the number of actual or obligated hours of care, and signatures of the provider with a counter signature of the custodial parent attesting to the claimed amount. The claim is forwarded to the Program's financial records-keeper who reviews and compares the amount claimed to the contract on file prior to payment. Year-end final Fiscal Reports are prepared annually for the State of California's Department of Education - Child Development Division

9 CHILD DEVELOPMENT PROGRAM Notes To the Basic Financial Statements June 30, 2007 The certification of client program eligibility is determined by an assigned Human Services Department Social Worker. All questionable child care claims submitted for payment that do not fall within the client's current day care provider's contract are returned for adjustment or approval to the Human Services Department Social Worker who is assigned to the case. Under the Program's requirements, a level of need criteria is identified to make the client eligible. B. Contractual Obligations with Agency The County of Sonoma, under contractual agreement No. CAPP-6080, July 1, 2006, has obligated itself to the State of California Department of Education to acquire child care services for qualified families. The contracts are effective from July 1, 2006 through June 30, Limitations are identified within the contractual agreements governing the administrative procedures, costs of the operation of the Program and availability of funds. For the fiscal year 2006/2007, the Child Development Program contracts obtained by the County of Sonoma Human Services Department were for an amount not to exceed $374,710. Maintenance of Effort (MOE) was contributed by the County as required by the Education Code, Sections 8279 and The County satisfied its MOE requirement of $7,662, as follows: The amount distributed to non-county child care programs $ 382,372 Net reimbursable costs in excess of reimbursable earnings 0 Reimbursable distributions to non-county child care programs, including administrative costs of $20, ,372 Amount retained by County s Child Development Programs $ 374,710 Maintenance of Effort Requirement $ 7,662 Payments to providers for childcare in excess of the State contracts and the County MOE were paid for by the County of Sonoma general fund and shown as transfers to the Program

10 CHILD DEVELOPMENT PROGRAM Notes To the Basic Financial Statements June 30, 2007 C. Records Maintenance Attendance records are being maintained in accordance with the requirements of the State of California Department of Education, Child Development Division. The original supporting records used for reporting children's attendance data for apportionment purposes, such as sign-in, sign-out sheets and/or daily attendance records are filed with the Human Services Department Social Worker. D. Final Reimbursement The California Department of Education's (CDE) Office of External Audits conducts a review of the audit to determine the contractor's net reimbursable program costs and amounts due the State. The Office of External Audits' determination of earnings is the final accounting of any amount payable to or receivable from the contractor pursuant to the contract. II. Summary of Significant Accounting Policies A. Basis of Accounting All governmental non-enterprise funds are accounted for using the modified accrual basis of accounting. On this basis, revenues are recognized when they become measurable and available and expenditures are generally recognized when the fund liability is incurred. Grant funds are considered earned to the extent of expenditures made under the provisions of the grant. Accounts payable at June 30, 2007 represent payments due to providers. B. Basis of Presentation Governmental Fund Types The General Fund, a type of governmental fund, is used to account for the Program s acquisition, use and balances of their expendable financial resources. The difference between the funds assets and liabilities is the fund balance. Governmental funds use a current financial resources measurement focus, which means that only current assets and current liabilities are included on the balance sheet

11 CHILD DEVELOPMENT PROGRAM Notes To the Basic Financial Statements June 30, 2007 C. Cash in Treasury The County of Sonoma Treasurer maintains a cash and investment pool that is available for use by all funds. Separate cash balances for the Child Development Program are not maintained by the County of Sonoma Treasurer. Cash balances for individual contracts are determined from cash receipt and cash disbursement records of the Program. D. Cost Allocation of Expenses The Child Development Program allocates all costs based on a method that best represents the benefits received and/or costs expensed. Accordingly, the Child Development Program uses several standard methods of expense allocations: Direct Charge: Not a shared cost. All actual costs are directly identified with and charged to the program. Staff Time: Shared cost. Actual costs are allocated to each program based on the total actual staff time spent on each program. Administrative costs are based on an indirect cost allocation plan approved by the California Department of Social Services. E. Risk Management The Program s administrative staff are County employees and as such are covered by the County of Sonoma s self-insurance program for general liability coverage. The County of Sonoma maintains a self-insurance retention of $1,000,000 per occurrence. Additional limits of $15,000,000 are provided through CSAC Excess Insurance Authority Liability Program. The County of Sonoma is also self-insured for Workers Compensation coverage and maintains a self-insurance retention of $300,000 per occurrence. F. Restriction on Inter-fund Borrowings The California Department of Education prohibits inter-fund borrowings of any revenues received through a State of California contract to programs funded by other sources

12 CHILD DEVELOPMENT PROGRAM Notes To the Basic Financial Statements June 30, 2007 G. Due to County of Sonoma - General Fund The County of Sonoma does not have a separate fund to account for the activities of the Program. One revenue line item and one expenditure line item in the County s general fund are used to account for and keep separate the activities of the Program. Due to the County of Sonoma - General Fund is the difference between the receivable from the California Department of Education less the accounts payables from vendors

13 SUPPLEMENTARY INFORMATION

14 CHILD DEVELOPMENT PROGRAM General Information June 30, 2007 Full Official Name of Agency: Division Program Numbers: Type of Agency: Address of Agency's Office: County of Sonoma Human Services Department Family, Youth and Children Services # 49-K (State) # 49-K (Federal) Local Government 3600 Westwind Blvd Santa Rosa, California Names of Administrative Management Personnel: Director Jo Weber Human Services Department (707) Fiscal Services Manager Administrative Services Officer Gail Goring (707) Sue Lowman (707) Agency's Telephone Number: (707) Audit Agency's Telephone Number: (707) Examination Period: July 1, June 30, 2007 Number of Days of Operation for Agency: 249 Days Scheduled Hours of Operation each day: Varies - 9 -

15 CHILD DEVELOPMENT PROGRAM NO. 49-K CONTRACT NO. CAPP-6080 Schedule of Expenditures by State Categories For the Fiscal Year Ended June 30, 2007 Alternative Payment DIRECT PAYMENTS TO PROVIDERS 2000 Classified Salaries 2300 Clerical and other salaries $ 21, Employee benefits 3300 Social Secuirty (old age, survivor's disability) 1, Health and welfare benefits 8, Worker's Compenstion Insurance 1, Services and Other Operating Expenses 5700 Legal, election, and audit 7, Other services and operating expenses 12,587 Subtotal 53,203 Less: Nonreimbursable expenditures 0 Total reimbursable expenditures $ 53,203 We have examined the claims filed for reimbursement and the original supporting records covering the transactions under these contracts to an extent considered necessary to assure ourselves that the amounts claimed by the Program were proper

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17 CHILD DEVELOPMENT PROGRAM CDE Contract Summary June 30, 2007 Audited Final Attendance and Fiscal Report CDE Program Name Contract No. Maximum Reimbursable Amount AUD 9500-AP General-Alternative Plan CAPP-6080 $ 226,

18 BLANK PAGE. SEPARATE INSERT. AUDITED FINAL FISCAL REPORT for Alternative Payment or Family Child Care Home Programs

19 CHILD DEVELOPMENT PROGRAM Schedule of Findings and Questioned Costs June 30, 2007 A. Summary of Audit Results 1. The auditor s report expresses an unqualified opinion on the basic financial statements of the County of Sonoma Human Services Department Child Development Program No. 49-K , California Department of Education Contract No. CAPP No reportable conditions relating to the audit of the financial statements are reported in the Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. 3. During the audit, no material weaknesses were identified in the internal control over financial reporting. 4. No instances of noncompliance material to the financial statements of the County of Sonoma Health Services Department Child Development Program No. 49-K , California Department of Education Contract No. CAPP-6080 were disclosed during the audit. B. Findings Financial Statements Audit None

20 Blank page. Separate insert. Schedule of Federally Funded Expenditures (page 1 of 2)

21 Blank page. Separate insert. Schedule of Federally Funded Expenditures (page 2 of 2)

22 CHILD DEVELOPMENT PROGRAM NO. 49-K CONTRACT NO. CAPP-6080 Combining Schedule of Administrative Costs For the Fiscal Year Ended June 30, 2007 Alternative Resource Payment and Referral Total Other expense $ 12,587 $ $ 12,587 Audit expense 7,500 7,500 Total $ 20,087 $ 0 $ 20,087 The notes to the basic financial statements are an integral part of this statem

23 RODNEY A. DOLE AUDITOR-CONTROLLER TREASURER -TAX COLLECTOR Auditor-Controller Treasurer-Tax Collector County of Sonoma 585 FISCAL DRIVE SUITE 101F SANTA ROSA, CALIFORNIA (707) FAX (707) DONNA M. DUNK ASSISTANT AUDITOR-CONTROLLER ROBERT BOITANO ASSISTANT TREASURER PAM JOHNSTON ASSISTANT TAX COLLECTOR / AUDITOR Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Reports Performed in Accordance with Government Auditing Standards We have audited the financial statements of the County of Sonoma Human Services Department Child Development Program No.49-K , California Department of Education Contract No. CAPP-6080 as of and for the year ended June 30, 2007, and have issued our report thereon dated December 14, We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the County of Sonoma Human Services Department Child Development Program financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the County of Sonoma Human Services Department Child Development Program s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses.

24 This report is intended solely for the information and use of management, the County of Sonoma Board of Supervisors and the California Department of Education and is not intended to be and should not be used by anyone other than these specified parties. December 14,